Aer Lingus to announce huge job losses

AER LINGUS is expected to announce hundreds of job losses today when it briefs staff on plans to cut costs and reverse mounting losses.

Up to 650 cabin and ground crew could be made redundant, with many more workers facing swingeing pay cuts.

The airline, which has fended off two hostile bids from Ryanair, said in August it would have to cut wages and jobs, but a detailed plan had to await the arrival last month of chief executive Christoph Mueller, the former TUI, Sabena, and Deutsche Post executive who took up his post on October 1.

The first non-native at the helm of Aer Lingus, he put the airline’s chances of survival at “just higher than 50:50”. The company recently announced its worst six-month loss of €93m, which is expected to soar to €130m by the end of the year.

A strike is also looming at Aer Lingus over a massive €350m pension scheme shortfall that is greater than the value of the airline.

In a new report the main union at Aer Lingus estimates the pension deficit in the Irish Airlines Superannuation Scheme stands at between €357m and €385m. This is higher than the value of the troubled airline earlier this month, which saw its market capitalisation plummet to €313m.

Today’s briefing is expected to pave the way for a restructuring of the airline.

“There is a series of workshops taking place that the company are hosting,” said a spokesman for the IMPACT trade union, which represents hundreds of Aer Lingus cabin crew and pilots.

“This is apparently when they will present their cost-cutting proposals.”

A spokesman for Aer Lingus said some internal briefings were scheduled for today, adding he “could not confirm that any announcement was due” and would not elaborate.

IMPACT said Aer Lingus had not yet informed the union about the content of the restructuring proposals. SIPTU, which represents mainly ground crew, said it would wait until Aer Lingus’s announcement before making a comment.

In advance of what is believed to be a radical plan for cutting costs, the share price of Aer Lingus yesterday rose by 10%.

Aer Lingus has been fast burning through its cash reserves due to a combination of declining sales – especially on long-haul routes – and high labour costs, a legacy of its history as a state-owned company.

A source close to the company, whose rival Ryanair has one of the lowest cost bases in the industry worldwide, said in August the planned savings could affect 10% of its cost base. The board had agreed on a cost-cutting programme which could involve close to 500 of about 3,900 staff leaving the company and remaining employees taking a 10% pay cut.